DIRECTORS' REPORT Dear Members, Your Directors present herein the Twenty-Eighth Annual Report on the operations of your Company and the Audited Statement of accounts for the year ended 31st March 2015. PERFORMANCE The total income for the year was Rs. 381.25 crores as against Rs.525.97 crores in the previous year. The reduction in the income as compared to the previous year was mainly on account of reduced free sugar sales. The Gross Operating Proit has come down to Rs. 7.15 crores from Rs.51.20 crores in the previous year. The reduction in the Gross Operating Proit was mainly on account of increase in the cane cost by Rs.190 per MT and reduction in the average sugar selling price and reduction in the Inventory valuation. Consequently the operation has resulted in to a Cash loss of Rs 59.35 crores as against the proit of Rs 14.27 crores in the previous year. The loss after Depreciation & Interest was Rs.80.55 crores as against the loss of Rs.42.96 crores in the previous year. The Net loss after taking credit for deferred tax asset amount of Rs.6.39 crores works out Rs.74.16 crores as against the Loss of Rs.33.79 crores in the previous year. Sugar: During the year under review, the Company has crushed 10.58 lakh tonnes of cane as against 16.14 lakh tonnes of cane in the previous year. The decrease in cane crushing is mainly due to decreased availability of cane at our cane command area on account of drought. The total sugar production was 9.67 Lakh Qtls as against 14.00 lakh Qtls in the previous year. The total sugar sale was 9.59 lakh qtls as against 14.00 Lakh qtls in the previous year. The reduction in the sales was mainly on account of the reduced free sugar sales consequent to imposition of VAT in Tamil Nadu . The Average realization for the year 2014-15 was lower at Rs.2914/Qtl as against Rs.2970/Qtls in the previous year. Power: During this period, the total power generation was 946.92 lakh units as against 1345.90 lakh units in the previous year. The export to the TNEB grid was 604.38 lakh units as against 828.54 lakh units in the previous year . The reduction in the power generation and export was due to lower volume of cane crushing at 10.58 Lakh tonnes as against 16.14 lakh tonnes crushed in the previous year. The average realization per unit is Rs.3.95 /unit as against Rs.3.89/unit in the previous year. On account of this, total value of the power exported to the grid has decreased to Rs.23.85 crores from Rs 32.19 crores in the previous year. Industrial Alcohol: The production of industrial Alcohol was 129.15 lakh liters as against 218.87 lakh liters in the previous year. The Company was able to sell the entire production of Alcohol and the sale was 139.87 lakh liters as against 210.86 lakh liters in the previous year. Consequent to this, The Alcohol sales value has decreased to Rs.59.22 crores from Rs.75.75 crores in the previous year. The average realization was Rs. 42.03 liters as against Rs.35.45 /liters in the previous year. DIVIDEND Due to absence of profits in the current year, the Board of Directors is unable to recommend any dividend for the year 2014-15. RESERVES During the year, your Company has not transferred any amount to General Reserves account due to loss for the year 2014-15. SHARE CAPITAL There is no change in the Share Capital of the Company either in the Authorised Capital or in the Issued Capital. The paid up equity capital as on March 31, 2015 was Rs.29,38,98,460. The Company has not issued any shares during the period EXTRACT OF ANNUAL RETURN Extract of the Annual Return in form MGT-9 is attached herewith. (Annexure - I) BOARD MEETING During the year 2014-15 ive Board Meetings were held on 29.05.2014, 13.08.2014, 12.11.2014, 19.01.2015 and 11.02.2015. LOANS, GUARANTEES OR INVESTMENTS Your Company has not given any loans or provided any guarantees or acquired securities exceeding 60% of its paid up Share Capital, free reserves and security premium account covered under the provisions of Section 186 of the Companies Act, 2013. CONTRACTS, ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) All transactions entered into by the Company with Related Parties were in the Ordinary Course of Business and at arm's Length pricing basis. The Audit Committee granted omnibus approval for the transactions (which are repetitive in nature) and the same was reviewed by the Audit Committee and the Board of Directors. There were no materially signiicant transactions with Related Parties during the inancial year 2014-15 which were in conflict with the interest of the Company. Suitable disclosures as required under AS-18 have been made in Note 25.4.11 of the Notes to the financial statements. Details of the transaction are provided in Form AOC-2 which is attached as Annexure-II to this Report. AUDITOR'S REPORT The observations made in the Auditors' Report read together with relevant notes thereon are self-explanatory and hence, do not call for any further comments under Section 134 of the Companies Act, 2013. There are no qualifications, reservations, or adverse remarks. MATERIAL CHANGES AND COMMITMENTS There were no material changes and commitments affecting the inancial position of the Company, which have occurred between the end of the financial year and the date of the report FOREIGN EXCHANGE EARNINGS AND OUT-GO, CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are given in the Annexure - III SUBSIDIARY COMPANIES The Company does not have any subsidiary or any associate Company. Hence no report on subsidiary, associate, joint venture Company is included. RISK MANAGEMENT POLICY The Company has developed a risk management policy. Pursuant to Section 134 (3) (n) of the Companies Act, 2013 details of the Policy are disclosed in the Company's Website. At present the Company has not identiied any element of risk which may threaten the existence of the Company. DIRECTORS AND KEY MANAGERIAL PERSONNEL A. Mr A Sennimalai, (DIN 00062791) retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. Dr Palani G Periasamy, (DIN 00081002) was re-appointed as Whole time Director for a further term of 5 years from 25.06.2014 and approval of the Shareholders obtained in the last Annual General Meeting held on 25th September 2014. Mrs Visalakshi Periasamy, (DIN 00064517) was appointed as additional director with effect from 14.11.2014 and is being proposed for appointment as Regular Director. Mr P Selvam IAS Retd ( DIN 01351493) and Dr S Muthu (DIN 03331664 were appointed as additional Independent Directors on 12.11.2014 and are being proposed for appointment as Regular Independent Directors. Mr M P Kaliannan, President (Corporate Finance) was appointed as the Chief Financial Officer with effect from 01.09.2014. B. The Independent Directors have given their declarations as per Section 149 (6) that they meet the criteria of Independence. The 3 Independent Directors viz, Dr K N Sivasubramanian, Mr T Pitchandi and Mr P S Gopalakrishnan who were appointed as Independent Directors in the Annual General Meeting held on 25th September 2014 will hold ofice for 5 years from 25.09.2014 to 24.09.2019. SIGNIFICANT AND MATERIAL ORDERS There were no signiicant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations in future. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is deined by this Audit Committee. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board & to the Chairman & Managing Director. The Internal Audit Department monitors and evaluates the eficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations, if any, and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. FIXED DEPOSITS During the year 2014-15 no amount was collected as deposits as deined in Section 73 and 74 of chapter V of the new Companies Act 2013. Your Company has complied with the provisions of Section 58 (A) and 58 (AA) of the Companies Act, 1956 and the rules prescribed there under. Your Company has no unpaid deposits which were due or repayable as on 31st March 2015. Your Company has not defaulted in repayment of the deposits on the due dates. As on the date of this report, there are no unclaimed deposits. CODE OF CONDUCT The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the Company. The Code has been posted on the Company's website www.dharanisugars.in The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard. PROHIBITION OF INSIDER TRADING The Company has adopted a Code of disclosures & a Code of Conduct for Prohibition of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code. SECRETARIAL AUDIT Pursuant to provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company had appointed Mr M Damodaran and Associates Company Secretaries in practice to undertake the Secretarial Audit of the Company. Their Audit report is annexed herewith as "Annexure as on 31st March 2015. There were no qualifications or observations requiring Board comments. (Annexure IV) CORPORATE SOCIAL RESPONSIBILITY INITIATIVES Your Company falls within the parameters as per section 135 of the Companies Act. A Corporate Social Responsibility (CSR) Committee has been formed. However, as the average of the net profits for the last 3 years is negative, no expenditure has been earmarked on this account. CSR policy has been framed and is available on the Website. Members of the Committee are: (1) Mr. P. S. Gopalakrishnan Mr. M. Ramalingam BOARD EVALUATION (2) Mr. A. Sennimalai (3) Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees as also the Independent Directors. The manner in which the evaluation has been carried out is attached (Annexure -V) REMUNERATION POLICY The Remuneration policy of the Company comprising the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualiications, positive attributes, independence of a Director and other related matters has been provided in the Corporate Governance Report which is attached as Annexure-VI to this Report. VI G I L M E C H AN I SM F O R D I R E C TO R S & EMPLOYEES Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Board of Directors had approved the Policy on Vigil Mechanism/ Whistle Blower and the same is hosted on the website of the Company. This Policy inter-alia provides a direct access to the Chairman of the Audit Committee. (Annexure - VII) Your Company hereby affirms that no Director/ employee have been denied access to the Chairman of the Audit Committee and that no complaints were received during the year. CORPORATE GOVERNANCE A report on Corporate Governance and a management discussion and analysis report, in line with SEBI prescribed format incorporated in the Listing Agreement, are attached herewith. A certificate from the Statutory Auditors on compliance of conditions of Corporate Governance has been obtained and copy enclosed to this report. PREVENTION OF SEXUAL HARASSMENT The Company has in place an Anti Sexual harassment policy in line with the requirements of the Section 4 of the Sexual harassment of Women at Work Place (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received about sexual harassment. All employees are covered under this policy. Details have been displayed prominently in the work place and also in the Company's Website. The following is a summary of such complaints received & disposed during the year 2014-15. No. of Complaints received - Nil, No of complaints disposed off - Nil. STATUTORY AUDITORS M/s Srinvasan & Shankar, Chartered Accountants, Chennai (FRN 005093S) retire as Statutory Auditors on the conclusion of this Annual General Meeting. They can be continued for a further period of 2 years, though they have completed the two terms of 5 years each on 31.03.2014. They have conveyed their consent for reappointment and have also furnished the required declaration as required in Section 139 of the Act. Accordingly, they are being proposed for re-appointment for a period of 2 years from 01.04.2015 to 31.03.2017, subject to approval in the Annual General Meeting. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Annexure attached in the Board's Report DIRECTOR'S RESPONSIBILITY STATEMENT In terms of Section 134 (5) of the Companies Act, 2013, the directors state that: i) In the preparation of the annual accounts, the applicable accounting standards have been followed. ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review. iii) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. iv) The directors have prepared the annual accounts on a going concern basis. v) The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. vi) The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively. ACKNOWLEDGEMENTS The Board of Directors places on record its appreciation of the support, assistance and co-operation received from the Central Government, Government of Tamil Nadu, various governmental agencies, ICICI Bank Limited, IREDA, the Company's bankers, Indian Bank, State Bank of India, The South Indian Bank Limited, Bank of India, Central Bank of India, The Federal Bank Limited, Union Bank of India, IDBI Bank Ltd and Indian Overseas Bank. The Board of Directors also wishes to place on record its appreciation for the cane growers, without whose help and support it could not have achieved the progress that has been made so far. With our encouragement and their initiative, we hope for improved cane availability for the ensuing years. Your Directors are thankful to the employees of the Company for their wholehearted co-operation and unstinted dedication to duty leading to cordial industrial relations during the year under review. The Board is thankful and grateful for the continuing cooperation to the management from the shareholders family since inception and is conident that this partnership will sustain forever. for and on behalf of the Board of Directors DR PALANI G PERIASAMY Chairman Place: Chennai Dated: 27th May 2015 |